Proposed law on landlord-tenant relations and fair, reasonable, and affordable rents in Mexico City

The Head of Government of Mexico City has submitted a legislative proposal to the Mexico City Congress that would establish a new comprehensive regulatory framework for residential landlord-tenant relationships, including a dedicated sanctions regime, mandatory registration of lease agreements, and a new Tenant Relations Defense Office. The proposed legislation could have a direct impact on residential housing developers and multifamily operators in the city.

On October 14, 2026, during the presentation of her Second Government Report before the plenary session of the Mexico City Congress, Mexico City Head of Government Clara Brugada Molina formally submitted the proposed "Law on Landlord-Tenant Relations and Fair, Reasonable, and Affordable Rents" (Ley de Relaciones Inquilinarias y Rentas Justas, Razonables y Asequibles). The proposal was published in the Parliamentary Gazette that same day and builds on a previously proposed amendment to the Political Constitution of Mexico City, introduced in April 2026, which, among other objectives, seeks to establish the legal basis for limiting residential rent increases in the capital.

The bill substantially expands the regulatory framework established in 2024 under the Mexico City Civil Code¹, which caps annual rent increases at the inflation rate reported by the National Institute of Statistics and Geography (INEGI) for the preceding year². The new proposal goes beyond this cap by introducing a dedicated sanctions regime, mandatory digital registration of lease agreements, a new tenant protection authority, and additional rules governing minimum lease terms, security deposits and guarantees, non-discrimination, and eviction procedures.

Key provisions of the proposed law

Property-based cap on rent increases. Annual rent increases may not exceed the inflation rate reported by INEGI for the preceding year. Unlike the 2024 framework, this restriction would apply to both lease renewals and new lease agreements, even when the tenant changes, effectively preventing landlords from resetting rents each time a new tenant occupies the property.

Prior authorization for extraordinary rent increases. To increase the rent for a residential property beyond the standard permitted adjustment, the landlord would be required to obtain authorization from the Tenant Relations Defense Office (Defensoría de las Relaciones Inquilinarias) and demonstrate that improvements made to the property justify the proposed increase.

Digital Registry of Residential Lease Agreements. The proposed law would establish a mandatory digital registry of residential lease agreements, administered by the Digital Agency for Public Innovation (ADIP). All lease agreements would have to be registered within 30 days of execution, including information on the parties, the property’s location and floor area, rental amount, security deposit, guarantees, and lease term. If the landlord fails to register the agreement, the tenant would be entitled to do so.

Mandatory lease extension and reimbursement of overpayments. If, upon renewal, the landlord sets a rental amount exceeding the permitted increase, the tenant may elect to continue paying the previously agreed rent adjusted for INEGI inflation. In such cases, the lease would be deemed extended for an additional year under its original terms. The tenant would also be entitled to seek reimbursement of any amounts paid in excess of the permitted rent, without prejudice to any administrative penalties imposed on the landlord.

Minimum lease term and single rental price. All residential lease agreements would have a minimum term of one year. To this end, the proposed law would repeal Article 2309 of the Mexico City Civil Code and incorporate this requirement into the new legislation. Landlords would be required to establish a single rental price, except for maintenance fees or service charges agreed upon in advance.

Limits on guarantees and prohibition on passing costs to tenants. Landlords would be permitted to require only one form of security for the tenant’s obligations, such as a security deposit, guarantor, or joint and several obligor. Landlords would also be prohibited from passing on brokerage fees, fees for legal protection services (pólizas jurídicas), background check expenses, or contract preparation fees to tenants. Security deposits would have to be returned upon surrender of the property, except where there are outstanding utility or service charges or damage beyond normal wear and tear.

Non-discrimination. The proposed law would prohibit landlords from refusing, restricting, or imposing conditions on residential leases because a prospective tenant lives with children, infants, or pets, or based on personal characteristics such as ethnic origin, nationality, physical appearance, gender, age, sexual orientation, or gender identity, among others.

Penalties and enforcement. Rent increases exceeding the permitted cap would be subject to fines ranging from 100 to 400 Units of Measurement and Adjustment (UMAs)³. Failure to provide the tenant with the original lease agreement would carry fines of 25 to 50 UMAs⁴, while failure to register a lease agreement would result in fines equivalent to one to three months of the agreed rent. The proposal also establishes penalties for tenants: 50 to 100 UMAs⁵ for using the property for non-residential purposes without consent, and 50 to 200 UMAs⁶ for making unauthorized modifications to the property.

New regulatory bodies. The proposed law would establish a Tenant Relations Defense Office (Defensoría de las Relaciones Inquilinarias), operating under the Social Attorney’s Office (Procuraduría Social), with authority to provide legal guidance, conduct mediation, carry out inspections, and impose administrative penalties. It would also create a Social Support Committee for Evictions (Gabinete de Acompañamiento Social ante Desalojos), led by the Ministry of Government, to identify potential social or humanitarian risks in eviction proceedings and seek opportunities for conciliation before evictions are carried out.

Announced incentives for affordable housing. In parallel, the Head of Government announced plans to establish an incentive program to encourage real estate developers to build affordable housing for working families, as well as the construction of 2,000 rental housing units for young people. The bill’s transitional provisions would authorize the Head of Government to issue a general resolution establishing benefits for landlords who enter into multiyear lease agreements or increase the supply of affordable rental housing. The specific scope of these incentives has yet to be defined.

Risks

The proposed law represents a substantial tightening of the regulatory framework in place since 2024 and presents specific risks for residential housing developers and multifamily operators in Mexico City.

The prior authorization requirement for extraordinary rent increases introduces administrative discretion rather than an automatic CAP. Landlords would be required to demonstrate to the Tenant Relations Defense Office (Defensoría de las Relaciones Inquilinarias) that improvements made to the property justify rent increases above inflation. This could create operational uncertainty and additional compliance costs, particularly for rental portfolios with frequent tenant turnover.

The elimination of the ability to reset rents when tenants change would directly affect pricing strategies for multifamily properties, as the cap on rent increases would be tied to the property itself rather than to the individual lease agreement with each tenant.

The requirement to register lease agreements with ADIP within 30 days, combined with a penalties regime that includes fines of up to 400 UMAs, would increase administrative burdens and the risk of inadvertent noncompliance, particularly for operators managing large rental portfolios. Real estate industry representatives have also noted that some reports describe timely registration as a potential requirement for the validity of lease agreements, an issue that will need to be confirmed against the final enacted legislation.

Industry associations, including the Real Estate Developers Association (Asociación de Desarrolladores Inmobiliarios, ADI) and the National Chamber of the Housing Development and Promotion Industry (Cámara Nacional de la Industria de Desarrollo y Promoción de Vivienda, CANADEVI), have warned that measures of this nature could discourage private investment, reduce new construction, and constrain the supply of rental housing. These concerns arise against a backdrop of significantly reduced developer investment in Mexico City relative to other Mexican states, which has been attributed in part to uncertainty surrounding project approval timelines.

The prohibition on passing brokerage fees, fees for legal protection services, and background check expenses on to tenants, together with the restriction to a single form of security for lease obligations, could increase landlords’ credit exposure without clear risk mitigation mechanisms. This is particularly relevant for institutional residential rental operators.

Finally, the proposed law has emerged amid active political opposition within the Mexico City Congress, creating additional uncertainty regarding the final provisions that may be adopted and the timeline for their entry into force. These factors should be considered when making near-term investment decisions or structuring new residential development projects.

Preventive measures

Residential developers with rental housing portfolios in Mexico City are advised to begin reviewing their existing lease agreements and annual rent increase policies to prepare for compliance with the inflation-based cap and the potential requirement to obtain prior authorization and provide evidence of property improvements to justify extraordinary rent increases.

Developers should also begin preparing the internal processes and documentation necessary for the potential mandatory digital registration of lease agreements with ADIP, including the minimum information required under the proposed law (identity of the parties, property location and floor area, rental amount, security deposit, guarantees, and lease term). This would help ensure that registration procedures can be implemented within the deadlines ultimately established.

Landlords should also review their policies regarding security deposits, guarantees, and charges imposed on tenants, including fees for legal protection services and brokerage fees, to anticipate any adjustments required under the proposed restrictions. Lease provisions governing minimum terms and renewal conditions should also be reviewed.

Where things stand: status of the legislative process

The bill was introduced on October 14, 2026, and formally referred on October 20 to the Joint Committees on Housing and on the Administration of Justice and Prosecution of the Mexico City Congress. It is currently under legislative review and, as of the date of this Client Alert, has neither been approved nor entered into force.

Constitutional background. The proposed secondary legislation builds on a proposed amendment to the Mexico City Constitution introduced by the Head of Government on April 22, 2026, and received by Congress on April 23. That proposed amendment, which remains pending committee review and a vote in the local Congress, was referred to the Joint Committees on Constitutional Matters and Citizen Initiatives and on Housing. It seeks to establish a constitutional basis for limiting rent increases and creating a tenant protection authority.

The April 2026 constitutional amendment remains pending a committee report. Rather than await its approval, the Mexico City Government proceeded in parallel with the proposed secondary legislation, which is following a separate legislative process. If the Law on Landlord-Tenant Relations and Fair, Reasonable, and Affordable Rents is enacted before the constitutional amendment is approved, certain provisions could lack an express constitutional basis, potentially making them more susceptible to legal challenges.

Public consultation and formal committee referral. On October 15, 2026, the Mexico City Congress launched an Open Parliament public consultation process, which will remain open until October 29, allowing members of the public to submit proposed amendments that must be considered by the reviewing committees. The Congress’s presiding board has also formally referred the bill to the relevant committees for review and preparation of a committee report.

Committee review deadline. The committees have until December 23, 2026, to issue their report. This deadline may be extended to March 1, 2027, subject to a substantiated request and approval by the full Congress. The committee report must subsequently be debated and voted on by the full Mexico City Congress.

Positions of political parties. Morena, which holds a majority in Congress, has publicly expressed its full support for the bill and its intention to secure approval during the current ordinary legislative session. In contrast, as of October 19, 2026, the parliamentary groups of the PAN, PRI, and Green Party (PVEM) had indicated that they would vote against the bill if its current provisions remained unchanged. Movimiento Ciudadano (MC) has also expressed opposition to the proposal. The PAN has announced plans to submit formal amendments during the committee review process.

What to expect. Given Morena’s support and the 45-business-day committee review period beginning with the formal referral on October 20, 2026, the Congress may seek to approve the legislation during the current ordinary session.⁷However, a possible extension of up to an additional 45 business days could delay the legislative timetable. The final text may also differ from the original proposal following the Open Parliament consultation process and negotiations with opposition parties. If enacted, the law would enter into force on the day following its publication in the Official Gazette of Mexico City. The Head of Government would then have 90 days to issue the corresponding implementing regulations and establish the Tenant Relations Defense Office. The same 90-day period would apply to ADIP for the implementation of the digital lease agreement registry.

_{1 See related Client Alert: Limits on Rent Increases in Mexico
2 A cap that the Mexican Supreme Court unanimously upheld as constitutional on February 25, 2026, in its decision on Amparo en Revisión 546/2025, filed by a real estate company.
3 Equivalent, as of the date of this publication, to approximately MXN 11,731 to MXN 46,924.
4 Equivalent, as of the date of this publication, to approximately MXN 2,932 to MXN 5,865.
5 Equivalent, as of the date of this publication, to approximately MXN 5,865 to MXN 11,730.
6 Equivalent, as of the date of this publication, to approximately MXN 5,865 to MXN 23,460.
7 Morena's majority parliamentary group, even with the support of its formal legislative allies, would need to negotiate and secure additional votes from at least one of the other political parties represented in Congress (PAN, PVEM, PT, MC, PRI, or PRD) to ensure passage of the legislation.}

_{White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.}

_{This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.}

_{© 2026 White & Case LLP}